US Fed Cuts Rates, Markets Soar After Trump Victory

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Facts

  • The US Federal Reserve on Thursday unanimously approved a quarter-point interest rate cut, bringing the federal funds rate to a range between 4.5% and 4.75%, following Tuesday's reelection of former Pres. Donald Trump.[1][2]
  • The reduction is a smaller move compared to September's half-point cut, as the Federal Reserve is seeking to maintain economic strength while keeping inflation on track to meet its 2% target. Over the summer, the Fed started this process by raising the rate to a range of 5.25% to 5.5% — a 23-year high.[1][3]
  • In addition to the rate cut, Federal Reserve Chairman Jerome Powell responded to a question about whether he would resign if requested by Trump by saying "no" and citing legal protections for the chairman position. Powell's term isn't up until 2026.[4]
  • Also on Thursday, major stock indexes continued to reach record highs following Election Day. The S&P 500 gained 0.74% to 5,973.10 and the Nasdaq advanced 1.51% to 19,269.46. The Dow Jones remained relatively flat at 43,729.34.[5][6]
  • Wall Street's reaction included significant gains in technology stocks, with Apple and Nvidia both rising 2.1% and Meta Platforms increasing 3.4%. But financial stocks retreated, with JPMorgan Chase falling 4.3% and American Express dropping 2.8%.[5]

Sources: [1]Washington Free Beacon, [2]ABC News, [3]American Conservative, [4]New York Post, [5]NBC and [6]USA Today.

Narratives

  • Republican narrative, as provided by Townhall. All it took was for Trump to get reelected to get America back on a positive roll. In addition to the Fed's interest rate cut, major manufacturers announced they're bringing jobs back to the US and China announced it wants to have better relations. In addition, numerous warring parties overseas have announced a desire for peace. This a strong start to what will be an even stronger term.
  • Democratic narrative, as provided by The Washington Post. This announcement is being falsely accredited to Trump's reelection. This cut was made possible because inflation significantly cooled under the Biden administration. But there's a softening job market, and if Trump goes through with some of his promised economic policies another rate cut may not come, or worse, the economy could head in the opposite direction.